Legislature(1993 - 1994)

04/01/1993 09:30 AM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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          SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE                        
                          April 1, 1993                                        
                            9:30 a.m.                                          
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Senator Randy Phillips, Chairman                                             
  Senator Robin Taylor, Vice Chairman                                          
  Senator Loren Leman                                                          
  Senator Al Adams                                                             
  Senator Fred Zharoff                                                         
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  None                                                                         
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Senator Judy Salo                                                            
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  SENATE BILL NO. 62                                                           
  "An Act relating  to the  public school foundation  program;                 
  and providing for an effective date."                                        
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
  SB 62 - See Community & Regional Affairs minutes                             
           dated 2/18/93.                                                      
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  Duane Guiley, Director                                                       
  School Finance                                                               
  Department of Education                                                      
  801 W. 10th St., Suite 200                                                   
  Juneau, AK 99801-1894                                                        
  POSITION STATEMENT:  Offered information on CSSB 62(CRA)                     
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 93-18, SIDE A                                                           
                                                                               
  Number 001                                                                   
  The Senate Community & Regional Affairs Committee was called                 
  to order by Chairman Randy Phillips at 9:30 a.m.                             
                                                                               
  SENATOR  RANDY PHILLIPS  introduced  SB  62  (PUBLIC  SCHOOL                 
  FOUNDATION  PROGRAM) as  the  only order  of  business.   He                 
  explained the meeting was being teleconferenced in a listen-                 
  only  mode, and  that  public testimony  would be  taken the                 
  following week.    He then  directed  attention to  a  draft                 
                                                                               
                                                                               
  committee substitute.                                                        
                                                                               
  Number 040                                                                   
                                                                               
  SENATOR  LEMAN moved  that CSSB  62(CRA) be adopted  for the                 
  purpose of discussion  and markup.  SENATOR  ADAMS objected.                 
  A hand vote was  taken with the following result:   Senators                 
  Leman, Taylor and  Phillips voted "Yea"; Senators  Adams and                 
  Zharoff voted "Nay."  The Chair  stated the CSSB 62(CRA) was                 
  adopted for discussion purposes only.                                        
                                                                               
  Number 057                                                                   
                                                                               
  SENATOR RANDY PHILLIPS  presented the following overview  on                 
  the main components of the proposed committee substitute:                    
                                                                               
  Concerns with the Alaska School  Price Index (ASPI) (Deleted                 
  from bill)                                                                   
                                                                               
  The  ASPI has a fundamental flaw.  One of the purposes given                 
  by  the  legislature  passing  HCR  23  in 1992  asking  for                 
  rewriting the foundation formula was to encourage schools to                 
  be fiscally responsible.   The ASPI does the opposite.   The                 
  ASPI  is  based  on  the actual  costs  incurred  by  school                 
  districts in 1988-89 and  1991-92.  This could  reward those                 
  school districts that were poorly managed and penalize those                 
  districts that have worked to keep their costs in line.                      
                                                                               
  Concerns with the  funding change int he  gifted program and                 
  vocational education.  (Deleted from bill)                                   
                                                                               
  The current law  rewards those districts that  have programs                 
  for gifted and  talented students.  The  original version of                 
  SB 62 gives gifted and vocational  education funding for all                 
  school districts based solely on  student population.  There                 
  is no incentive  for any school  to use these funds  whether                 
  for  a  gifted  and  talented   program  or  for  vocational                 
  education.  Additional funding for schools should be tied to                 
  the programs that the schools operate.                                       
                                                                               
  Local Contribution (Section 1 of CS)                                         
                                                                               
  Under the current law, local governments must contribute the                 
  lesser of 4 mills or 35  percent of basic need.  All  except                 
  three school districts  pay 4 mills, three  school districts                 
  pay 35 percent of  basic need at a mill rate  much less than                 
  4.   This  bill will  improve taxpayer  equity by  requiring                 
  these wealthier districts to make a larger contribution.                     
                                                                               
  Minimum size of funding communities (Section 2 of CS)                        
                                                                               
  While all students are entitled to  an education provided by                 
  the state, it is not reasonable  to operate schools that are                 
  below a certain  size.   Currently, schools with  as few  as                 
                                                                               
                                                                               
  five  students  are being  funded  with  costs  as  high  as                 
  $122,000 per student.   Under  this proposal students  would                 
  like have  the following options:   district correspondence;                 
  state correspondence; and state boarding school.                             
                                                                               
  Changing the divisor in the  large elementary school formula                 
  (Section 3 of CS)                                                            
                                                                               
  This  change benefits students in all schools with more than                 
  525 elementary students.   Currently, the formula recognizes                 
  the economy of  scale for larger schools.   However, smaller                 
  class  sizes for elementary  students have been  shown to be                 
  important no matter how large the school district is.                        
                                                                               
  Single site funding formula (Section 4 of the CS)                            
                                                                               
  Additional funding for single site  school districts has not                 
  been addressed in the  formula.  Each year, the  single site                 
  schools  come to  the  legislature  for additional  funding.                 
  Some  years   there  has   been   concern  about   political                 
  manipulation of  funding for  these schools.   This  section                 
  establishes  a   formula  for  the  additional  single  site                 
  funding.                                                                     
                                                                               
  Number 138                                                                   
                                                                               
  DUANE  GUILEY,   School  Finance  Director,   Department  of                 
  Education,  referring  to   Section  1   of  the   committee                 
  substitute, said currently, under the 35 percent requirement                 
  versus the proposed 50 percent  requirement, the North Slope                 
  School District, in the past, has been able to meet their 35                 
  percent  requirement with  as little  as four tenths  of one                 
  mill local contribution equivalent as  compared to the other                 
  districts  that  must  make  the  required four  mill  local                 
  contribution.    The effect of  the change will raise  their                 
  equivalent millage  requirement although  it still does  not                 
  approach the four mills.                                                     
                                                                               
  Turning to Section 2,  Mr. Guiley related that the  Board of                 
  Education this year approved  action through regulation that                 
  would eliminate funding  communities that have less  than 10                 
  students by the  year 1999.   This would affect 20  existing                 
  schools statewide.   The change in Section 2 to less than 25                 
  students has the potential to affect 71 schools statewide.                   
                                                                               
  Changing the  elementary divisor  as provided  in Section  3                 
  would award an additional unit of  funding for each group of                 
  16 students as opposed to the  current group of 17 students.                 
                                                                               
                                                                               
  In Section 4, the single  site number goes up to an  average                 
  daily  membership  size  of  900.   It  includes  additional                 
  districts,  and  now,  rather  than  having 22  single  site                 
  districts,  there will  be 24  single  site districts.   The                 
                                                                               
                                                                               
  amendment will also remove any reference to hold harmless.                   
                                                                               
  Number 193                                                                   
                                                                               
  SENATOR  TAYLOR noted  that he  is very concerned  about the                 
  committee substitute and  that he is going to have  a lot of                 
  questions on it.                                                             
                                                                               
  Number 205                                                                   
                                                                               
  SENATOR ADAMS asked Mr. Guiley if he had a chart showing the                 
  wealth per student  throughout the school districts.   DUANE                 
  GUILEY acknowledged that he did and said he would provide it                 
  to  the committee.   SENATOR  ADAMS also requested  that the                 
  fiscal note be broken out per sections.                                      
                                                                               
  Number 220                                                                   
                                                                               
  SENATOR ZHAROFF said he  has concerns with Section 1  and if                 
  it  meets the  disparity test  and if the  whole bill  is in                 
  conformity with the federal regulations as well.  He is also                 
  concerned with the  elimination of schools with  25 students                 
  or less, which  will have a definite  impact on a number  of                 
  the rural schools.  Another  concern is changing the divisor                 
  in the large elementary  school formula in Section 3  and if                 
  it is also meeting equitable funding for all students in the                 
  state.                                                                       
                                                                               
  Number 250                                                                   
                                                                               
  SENATOR  LEMAN said  he  would  like  to hear  if  students'                 
  education  would be  jeopardized  if  they  have  to  be  on                 
  centralized correspondence.                                                  
                                                                               
  Number 260                                                                   
                                                                               
  SENATOR SALO asked  if by deleting  the Alaska School  Price                 
  Index it has the effect of returning to the existent formula                 
  in regards  to  the area  cost differential.   DUANE  GUILEY                 
  acknowledged  it would.   With the  deletion of  the section                 
  referring to  the Alaska School Price Index, the fiscal note                 
  that the department  calculated was  based upon the  current                 
  area cost differential as it exists in statute.                              
                                                                               
  Responding  to Senator  Zharoff's  concern  with Section  1,                 
  which requires the 50 percent  local contribution as opposed                 
  to the existing 35 percent, Mr.  Guiley said this should not                 
  have any effect  on our  disparity test, in  that the  units                 
  generated by these specific schools are eliminated under the                 
  current state law.                                                           
                                                                               
  Number 298                                                                   
                                                                               
  SENATOR RANDY PHILLIPS invited the committee members to come                 
                                                                               
                                                                               
  up with  their recommendations  at the  next hearing on  the                 
  bill.                                                                        
                                                                               
  Number 305                                                                   
                                                                               
  SENATOR ZHAROFF requested that the  members be provided with                 
  a breakdown on other sources of  funds that are allocated to                 
  the school districts, a  breakdown for pupil  transportation                 
  and reimbursement for school indebtedness, etc.                              
  There  being  no   further  business  to  come   before  the                 
  committee, the meeting was adjourned at 9:52 a.m.                            

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